This year has been an important one for class action law. Here are 10 of the most important class action cases of 2021 and their impact on class action litigation.
In TransUnion, a class of 8,185 individuals sued TransUnion under the Fair Credit Reporting Act after the company had erroneously indicated that their names potentially matched a name on the U.S. Treasury Department’s Office of Foreign Assets Control list of terrorists, drug traffickers, and other serious criminals. Some of the class members had their credit reports disclosed to third parties, but others did not.
The U.S. Supreme Court addressed the issue of Article III standing and declared that “[e]very class member must have Article III standing in order to recover individual damages.” Ultimately, the court held that the mere existence of errors in credit reports, if not disseminated to third parties, was not a sufficiently concrete injury for Article III standing. Importantly, the court left open the question whether unnamed class members must demonstrate standing at or before class certification. This open question undoubtedly will lead to future litigation.
Olean involved antitrust claims against producers of packaged tuna. The district court certified three classes, and a panel of the Ninth Circuit Court of Appeals decertified the classes. The issue was whether the Rule 23 predominance requirement precludes the certification of classes in which more than a minimal number of class members have not suffered an injury. The panel held in the affirmative.
Several months later, however, the Ninth Circuit voted to revisit the case en banc. In September 2021, the court heard oral argument. Stay tuned for more.
Goldman was a securities class action under Section 10(b) of the Securities Exchange Act of 1934. The district court certified the class, and the Second Circuit affirmed. The Supreme Court, however, vacated the Second Circuit’s decision because it was not clear whether the Second Circuit considered the generic nature of the alleged misrepresentations in deciding that the alleged misrepresentations had an impact on Goldman’s stock price.
Goldman clarifies that the materiality of alleged misrepresentations is relevant to a showing of price impact, and a defendant is entitled to introduce materiality evidence to rebut the Basic presumption at the class certification stage — a conclusion that many courts rejected following the Supreme Court’s prior decisions in Halliburton and Amgen.
There currently is a circuit split regarding whether proving administrative feasibility is a prerequisite to class certification. The First, Third, and Fourth Circuits have imposed some sort of heightened administrative feasibility requirement in evaluating whether a class is ascertainable. But the Second, Sixth, Eighth, and Ninth Circuits reject that approach.
The Eleventh Circuit had previously adopted an administrative feasibility requirement in an unpublished opinion, Karhu v. Vital Pharmaceuticals, Inc. In Cherry, however, the Eleventh Circuit reversed course, overruling Karhu and holding that there is no administrative feasibility or heightened ascertainability requirement in the Eleventh Circuit.
The 2017 Equifax data breach was one of the largest data breaches of all time. Several class actions were consolidated in the Northern District of Georgia, where the parties sought to settle the dispute on a classwide basis. Of the approximately 147 million class members, 388 people objected to the settlement. Over their objections, the district court approved the settlement, certified the settlement class, awarded attorneys’ fees and expenses, and approved incentive awards for the class representatives.
Several of the objectors appealed, challenging the district court’s approval order. The Eleventh Circuit affirmed the district court with one exception. After the district court entered its approval order, an Eleventh Circuit panel held that such awards are prohibited. Therefore, the Eleventh Circuit reversed the district court to the extent it approved incentive awards and remanded solely for the purpose of vacating the awards. It thereby put its rubber stamp on “the largest and most comprehensive recovery in a data breach case in U.S. history by several orders of magnitude.”
In Prantil, property owners sued a chemical plant operator, seeking damages and injunctive relief for the physical and financial effects of the release of toxic ash and smoke following a fire at a plant. The district court certified the class. The defendant appealed to the Fifth Circuit, arguing, inter alia, that the district court erred by relying on certain expert opinions in its certification decision without first ensuring those opinions would be admissible at trial under Daubert.
The Fifth Circuit agreed, vacated the district court’s certification order, and held that the Daubert standard applies to expert opinions at class certification. In so holding, the Fifth Circuit joined the Third, Seventh, and Eleventh Circuits.
Moser was a class action asserting claims under the Telephone Consumer Protection Act (TCPA). The defendant filed a motion to dismiss but did not raise personal jurisdiction as a defense. Later, at class certification, the defendant challenged the personal jurisdiction of absent class members under Bristol-Myers, which held that state courts cannot exercise specific personal jurisdiction over nonresident plaintiffs’ claims in a mass action. The district court certified the two nationwide classes, holding that the defendant had waived its personal jurisdiction defense for failing to raise it in its motion to dismiss.
The Ninth Circuit vacated the certification order, finding that the defendant could not have raised the personal jurisdiction defense before class certification, as the unnamed putative class members were not yet parties to the case. “To conclude otherwise would be to endorse ‘the novel and surely erroneous argument that a nonnamed class member is a party to the class-action litigation before the class is certified.’”
However, the Ninth Circuit did not resolve the question whether Bristol-Myers applies to class actions. That question has been debated for several years. More clarity on that point is likely to come sooner rather than later.
In NCAA v. Alston, supporters of compensating student athletes notched a small win. A class of student athletes sued the NCAA for antitrust violations, and the Supreme Court held that NCAA rules limiting education-related benefits for student athletes were unlawful. However, the court declined to go one step further and hold that limitations on non-education-related benefits were unlawful.
Supporters of compensating student athletes may have found an advocate in Justice Kavanaugh, however. In Alston, Justice Kavanaugh wrote a concurring opinion questioning the NCAA’s model of uncompensated amateur athletics. He argued the NCAA’s business model would be illegal in almost any other industry, and he doubted whether colleges should be allowed to make billions of dollars by using unpaid student athletes. More litigation is sure to come.
In implementing the Telephone Consumer Protection Act (TCPA), the FCC promulgated a rule requiring businesses to include opt-out notices on solicited fax advertisements. The D.C. Circuit held that the rule was unlawful, making class certification more difficult for plaintiffs in TCPA fax blasting cases. Bais Yaakov of Spring Valley v. ACT shows how.
In Bais Yaakov, a private high school sued ACT Inc., the provider of the ACT, alleging that the company sent unsolicited fax advertisements in violation of the TCPA. In the words of the First Circuit, Bais Yaakov “pursued ACT with a zeal that would impress even Hugo’s Inspector Javert.” Despite that zeal, however, the district court denied class certification, and Bais Yaakov appealed.
The First Circuit affirmed, holding that the common issues of fact or law did not predominate over those affecting individual members because the TCPA claims would require individualized proof of whether the class members consented to receive the fax. This case thus puts the onus on plaintiffs in fax blasting cases to show why common issues predominate or to define the class in such a way as to avoid the necessity of individualized proof of consent.
In Citizens Bank, several plaintiffs brought an FLSA collective action and Rule 23 state law claims, alleging that Citizens Bank forced them to work over 40 hours per week without overtime. The district court scheduled a trial on the FLSA collective action but left open whether it would certify a class for state law claims. Citizens Bank petitioned for a writ of mandamus, and the Third Circuit Court of Appeals stayed the trial, explaining:
Allowing the District Court to conduct its planned FLSA collective action trial would publicly preview the evidence common to the FLSA and state-law claims. That would give potential Rule 23 class members an enormous informational advantage in any subsequent “do-over,” even if we were to ultimately vacate the FLSA verdict and remand for a pretrial Rule 23 class certification decision. In short, an appeal that comes too late can almost never unscramble the egg.
Citizens Bank shows that hybrid FLSA/Rule 23 cases can present complicated procedural issues and that Rule 23 certification motions should be resolved at an early stage of the case.
